Arona Corporation manufactures canoes in two departments, Fabrication and Waterproofing. In the Fabrication Department, fiberglass panels are attached to a canoe- shaped aluminum frame. The canoes are then transferred to the Waterproofing department to be coated with sealant. Arona uses a weighted-average process cost system to collect costs in both departments.All materials in the Fabrication Department are added at the beginning of the production process. On July 1, the Fabrication Department had 30 canoes in process that were 20% complete with respect to conversion cost. On July 31, Fabrication had 20 canoes in process that were 40% complete with respect to conversion cost. During July, the Fabrication Department completed 70 canoes and transferred them to the Waterproofing Department.What journal entry should Arona make to record the completion of the production process by the Waterproofing Department?

Question

Quizplus · Accepted Answer

The completion of the production process by the Waterproofing Department represents the transfer of finished goods from the Fabrication Department's work in process inventory to the Waterproofing Department's work in process inventory. Therefore, the journal entry should debit the Waterproofing Department's work in process inventory and credit the Fabrication Department's work in process inventory. The correct journal entry is:

Work in process—Waterproofing Department...........................$XXX
Work in process—Fabrication Department...................................$XXX

where the XXX represents the total cost of the 70 canoes transferred from Fabrication to Waterproofing. Answer option A correctly reflects this journal entry.

Arona Corporation Manufactures Canoes in Two Departments, Fabrication and Waterproofing